DivyaRaghavan

Women make up nearly half the U.S. workforce, receive more college degrees than men and are the sole breadwinners in four of 10 American households. Yet they earn less than men at virtually every job — a persistent problem known as the gender pay gap. And that gap can mean a more challenging retirement for women.

Since women working full time earn 78 cents for every dollar earned by men, on average, according to the American Association of University Women, this means they have less disposable income to stash in retirement plans like 401(k)s or individual retirement accounts (IRAs). They also have smaller Social Security benefits than men with similar work histories, since those checks are based on employment earnings.

A startling statistic: twice as many women 65 and older (2.6 million) lived in poverty in 2012 than men (1.3 million), according to the National Women’s Law Center.

The tale of Bob and Nancy

To see how the gender pay gap can do a number on women in retirement, consider the following hypothetical example of two new retirees, whom we’ll call Bob and Nancy. Bob worked for 30 years and earned $100,000 on average a year, or $3 million over his career. Nancy worked the same job but earned $80,000 annually, adding up to $2.4 million during her career.

If both Bob and Nancy contribute 5% of their pretax salary to a 401(k) account every year for 30 years and the account earns 6% a year on average, after 30 years, Bob would have $419,000 compared with just $335,207 for Nancy, a difference of nearly $84,000.

This means a more comfortable retirement for Bob, even though he worked the same job, contributed the same percent of money and earned the same returns as Nancy.

Social Security and women

Now, let’s look at the Social Security side of the equation. Social Security calculates your “average indexed monthly earnings” during the 35 years in which you earned the most. A formula is then applied to these earnings to determine your basic benefit, which is how much you receive during retirement.

In 2012, the average Social Security benefit received by women 65 and older was $12,520, compared with $16,398 for men — a $3,878 disparity, according to a Social Security Administration report.

Unmarried women and widows depend on Social Security more than others, because these checks make up 50.4% of their total retirement income, compared with just 35.9% of unmarried men’s and 30.2% of elderly couples’ incomes, the report says. In addition, women reaching age 65 today are expected to live at least two years longer than men, on average.

Women who want to boost their Social Security income could work longer, since benefits are higher if you delay collecting until after your Full Retirement Age (now between 66 and 67, depending on when you were born).

However, women looking to fill in the gap with a full- or part-time job might run into another roadblock: Women 50 and older working full time earn just 75% of what males earn and women 65 and older make just 60% of the earnings of their male counterparts, according to Social Security.

Ending the gender pay gap

Eliminating the gender pay gap would increase the wages of roughly 59% of women and lead to an additional $447.6 billion in income for them, according to a Social Security Works study.

But achieving this goal remains a challenge, and how to do it is up for debate.

Legislation known as The Paycheck Fairness Act would make it illegal for employers to pay unequal wages to men and women who perform the same job. President Obama has endorsed the goals of this bill, which passed the U.S. House of Representatives in 2009. In 2014, the bill was blocked by a Republican filibuster in the U.S. Senate.

A nationwide adoption of paid family leave might help close the gap, according to Social Security Works, a private advocacy organization. The proposed Family and Medical Insurance Leave Act would provide 12 weeks of paid leave to qualifying workers for the birth or adoption of a child, serious illness of a family member or a worker’s own medical condition.

Increasing the minimum wage to $10.10 an hour might be another partial solution. Since two-thirds of minimum wage workers are women, raising the level would close the wage gap by 5% and increase wages of 4.8 million working mothers, according to the National Women’s Law Center.

2 things women can do

There are a few things women can do to improve their financial situation in retirement without waiting for changes in the law.

They could, for instance, relocate to lower-cost areas so the money they have will go further. A cost of living calculator can show you how much you might save by moving.

They could also try increasing the amount they save for retirement. Many financial experts recommend stashing away at least 10% of your income for retirement and taking advantage of an employer’s 401(k) match, if this benefit is available where you work.

Divya Raghavan is an analyst for NerdWallet, a consumer advocacy and financial literacy website that helps consumers access business advice, personal finance tips and economic analyses.

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